Dive Brief:
- Effective Oct. 1, HUD is reducing the Federal Housing Administration multifamily mortgage insurance premiums for all programs to 25 basis points, the statutory minimum the agency must charge, per a notice published in the Federal Register on Tuesday.
- The update also eliminates three MIP rate categories — green and energy-efficient housing, affordable housing and broadly affordable housing — that the Federal Housing Commissioner said are “misaligned with the presidential memoranda and have become economically obsolete.”
- These across-the-board MIP reductions are necessitated by a sharp rise in construction costs and mortgage interest rates since 2021, according to the agency. The goal is to lower financing costs in order to expand the supply of rental housing.
Dive Insight:
The agency cites President Donald Trump’s memo, “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” which orders the heads of all executive departments and agencies to deliver emergency price relief, including by pursuing appropriate actions to lower the cost of housing and expand housing supply.
It also mentions Trump’s “Unleashing American Energy” executive order, which shifts the federal government’s priorities away from policies that promote green and energy-efficiency goals.
The update makes minor revisions to and finalizes HUD's prior notice about mortgage insurance premiums, first published on June 26.
HUD MIPs protect lenders and the agency from losses that occur when a borrower defaults on mortgage payments. MIPs are required for all FHA and HUD loans, including multifamily financing used to acquire, refinance or develop apartment buildings.
The National Association of Home Builders called the development “an important win” for its members in a Sept. 23 press release, and said it “should serve to stimulate the production of multifamily housing.”
With the cancellation of the Green and Energy Efficient Housing MIP program, NAHB encouraged those interested in constructing green properties to consider using the ICC 700 National Green Building Standard.
